Statement I.S corporations offer their shareholders limited liability and pay no corporate income tax.
Statement II.The vast majority of business owners incorporate to secure limited liability.

Question

Quizplus · Accepted Answer

Both statements are true. S corporations indeed provide their shareholders with limited liability and do not pay corporate income tax themselves; instead, profits and losses are passed through to shareholders' personal tax returns. Additionally, one of the primary reasons business owners choose to incorporate (into any form of corporation, not just S corporations) is to secure limited liability, protecting their personal assets from business debts and claims.